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June 18, 2007

Microsoft suing Immersion for breach of contract

Posted by Benjamin J. Romano at 2:24 PM

Microsoft is charging a San Jose-based company that integrates programmable touch feedback into digital interfaces with breach of contract. The company filed a complaint today against Immersion in U.S. District Court in Seattle.

Immersion owns patents on technology for haptics, "a Greek word meaning 'the science of touch,'" according to this description on Immersion's Web site.

According to the Microsoft complaint, in February 2002, Immersion sued Microsoft and Sony alleging that the companies violated those patents. The products in question were the companies' video game consoles, Xbox and PlayStation, respectively. Microsoft and Immersion settled in mid-2003.

One of the terms of the settlement required Immersion to make a substantial payment to Microsoft if it went on to settle with Sony.

Immersion won an $82 million verdict against Sony in September 2004 that was increased to $90.7 million, according to Microsoft's complaint. The verdict, which Sony appealed, also barred the company from selling its PlayStation video game console in the United States.

Not surprisingly, Sony appealed in early 2006 and later settled with Immersion, according to the Microsoft complaint.

It appears that there may be some dispute between Microsoft and Immersion over whether this was actually a settlement. Microsoft's lawyers spend several paragraphs in the complaint detailing why they think it is a settlement.

Despite statements by Immersion's CEO "and the inherent settlement nature of the Immersion/Sony Settlement Agreement, Immersion has actively attempted to describe and characterize its agreements with Sony as something other than a settlement in order to avoid its obligations under [the mid-2003 agreement with Microsoft]," the complaint states.

Microsoft is seeking the amount it thinks it is owed by Immersion -- not less than $15 million, plus an additional percentage of the Immersion/Sony settlement amount -- plus 12 percent interest and lawyers fees.

A spokeswoman for Immersion did not immediately respond to requests for comment.

Update:
Immersion posted a response on its Web site Tuesday: "Immersion believes that it is not obligated under the sublicense agreement with Microsoft to make any payment to Microsoft relating to the conclusion of its litigation with Sony Computer Entertainment. Immersion intends to defend this lawsuit vigorously."

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Benjamin J. Romano
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